LESOTHO’s credit bureau has expanded its scope by gathering business credit information in addition to collecting data for individuals.
The bureau, which is managed by South African firm Compuscan, was formally launched by the Central Bank of Lesotho in January 2016. It was established under the Credit Information Sharing project to improve access to finance in Lesotho by providing a stable and predictable credit market.
A credit bureau refers to an institution that collects and maintains individual credit information to sell or distribute to lenders, creditors and consumers.
The credit bureau had initially targeted individual borrowers rather than businesses for analyzing and sharing their credit information.
After conquering some initial teething problems, the bureau then cast its net wider to businesses.
Compuscan Country Manager ‘Mannete Khotle, this week told the Lesotho Times they were happy with the progress made thus far. Compuscan provides consumer and commercial credit information within South Africa and other African nations.
“We are currently at a stage where credit providers are actually making use of the credit information system to check the creditworthiness of their prospective clients before deciding whether to give them credit or not, and we are therefore happy that we are moving on from the information submission stage,” Ms Khotle said.
She said apart from commercial banks, micro finance institutions were also beginning to use their systems. However, clothing and furniture retailers were yet to come on board.
According to the Credit Reporting Act of 2011, all credit providing establishments are required to submit their credit information to the credit bureau for risk management by credit providers before deciding whether to give out credit to a prospective borrower or not.
“This year we will be starting to process the credit information of corporates to ensure their credit worthiness,” said Ms Khotle.
“Our intention is to penetrate the entire credit market of Lesotho in order to reduce the level of indebtedness in the country and, in so doing, encourage safe lending which will definitely have a positive impact on the country’s economic development.”
The bureau also intends to continue holding public awareness campaigns specifically targeting consumers.
“This is mainly to educate the people about what we are all about, and hopefully that will help dispel some misconceptions some seem to have about what a credit bureau is. We are not debt collectors or black-listers as some people seem to believe.”
Lesotho Micro Finance Association chairperson Mamakamane Makamane said they were doing all they could to comply with the Credit Reporting Act of 2011 although it was not easy as most of their members were still using manual systems of record keeping.
“We are trying our best to comply with the law, but I believe this will not just be an overnight thing because our members are micro enterprises that largely depend on manually recording their credit information,” she said.
“So, we first have to acquire computers, and then get the requisite skills to install the credit system into the computers to start submitting information to the credit bureau.”
Ms Makamane added they were in the process securing computer skills training for their members who come from different backgrounds with some being retrenched mine workers and ordinary people.
“We therefore hope the regulator will be lenient enough to allow us the necessary time for our members to be able to comply. It is a long-term process,” she said